Chip producers spared from impact of illness

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Chip producers spared from impact of illness

Global memory chip production appears to be unaffected by the outbreak of the novel coronavirus in China, a market researcher said Monday, as no chip manufacturing facilities in the virus-hit country have so far closed or suspended operations.

TrendForce said overall production of memory chips, such as DRAM and NAND flash, is likely to remain unaffected by the deadly virus in the short term, as global chipmakers’ plants, including those run by South Korea’s Samsung Electronics and SK hynix, are operating as usual.

The Chinese city of Wuhan, the capital of Hubei Province, is believed to be the place where the outbreak started.

So far, more than 360 people have been killed in China due to the novel coronavirus, with over 17,000 infected, according to Beijing’s health authorities.

“In terms of DRAM suppliers, of the three major suppliers, only SK hynix’s production base in Wuxi is located in China, but since it is far away from Wuhan, it has not been directly impacted by the outbreak,” TrendForce said. “Also, during the [Lunar ]New Year, the shifts of most [fabrication] employees have already been scheduled, so the production line remains operational.”

SK hynix is the No. 2 maker of DRAM chips in the world, with a 28 percent market share in the third quarter.

Although the outbreak doesn’t appear to have a big impact on DRAM production for the time being, TrendForce said chipmakers still need to monitor closely whether the spread of the virus could affect logistics and transportation systems in China and cause supply shortages.

Regarding NAND flash supply, TrendForce said it also finds no big problems in chipmakers’ fabrication operations, but noted that their expansion plans could be affected if the epidemic is prolonged.

Samsung, the world’s largest memory chipmaker, runs a NAND flash plant in Xian, Shaanxi Province, while U.S. tech giant Intel operates a NAND flash production facility in Dalian, Liaoning Province.

“Samsung’s Xian production base is the center of this year’s expansion,” it said. “Since the locations of both bases are relatively less affected by the epidemic, besides basic preventive measures, indirect labor will resume work on Feb. 3 and the [fabricators] will operate as usual.”

With memory chip fabs running normally, TrendForce also expected a slight increase in memory chip contract prices in the first quarter.

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